Blockchain Gets Into The Big Leagues

Payments and commerce so often boil down to giving consumers what they want, and the same is looking to be true for blockchain, the popular distributed ledger technology underlying cryptocurrencies such as bitcoin, Ethereum and Litecoin.

Of course, those are just the biggest names in the game today – there are hundreds of smaller companies trying to get their homegrown cryptocurrencies off the ground by wooing crypto fans with initial coin and token offerings (ICOs and ITOs).

Conversely, there are a few even bigger names looking to get into the game.

As PYMNTS recently reported, around half of those smaller ICOs have already failed. Out of 902 ICOs in 2017, 142 never raised enough capital to get off the ground, 276 got lost in the noise or turned out to be scams, and 113 stopped talking about their project online or simply did not attract enough adopters to succeed.

However, these upstarts are no longer the only competition. Industry giants are starting to think about jumping on the blockchain bandwagon. Could size be the secret to gaining traction in this space?

Indeed, Engadget surmised that many of those small ICOs failed because they were too niche (focused on specialized industries, such as trucking or dentistry) or didn’t go far enough to differentiate themselves from the successful tokens on whose coattails they were riding. Could attaching themselves to a name like Amazon or Starbucks have made the difference?

Such giants seem to think that ubiquity and brand recognition will indeed make the difference between a cryptocurrency that sizzles versus one that fizzles. Here’s what some of the biggest names in payments and commerce are planning with this burgeoning technology.

Amazon

Perhaps it’s not surprising, given the number of consumers who have invited Amazon’s virtual assistant Alexa into their homes, but more than half of Amazon users said they would consider using an Amazon-built cryptocurrency around the site – and Amazon Prime members were even more eager, with 58.27 percent in favor and only 21.9 percent opposed.

That’s according to a poll by student loan marketplace LendEDU, as reported by The Block.

However, CEO Andy Jassy said at November’s re:Invent conference that AWS did not have any plans to dive into the blockchain pool “just because we think it’s cool.” If the company goes there at all, analysts say it would only be with the utmost caution.

Alibaba

The Chinese eCommerce giant will reportedly use blockchain technology for its cross-border supply chain. This will enable Chinese consumers from anywhere in the country to track information on 30,000 goods from 50 countries represented on T-Mall’s mobile app.

T-Mall has been enjoying strong sales, but there is still concern over fake goods on the platform, a fear that a transparent supply chain built on blockchain tech could potentially help to alleviate.

Facebook

CEO Mark Zuckerberg kicked off the new year by declaring his intent to explore cryptocurrencies in Facebook’s ongoing battle against the proliferation of fake news and hate speech.

What could these two things possibly have to do with each other? Zuckerberg said in a post, “There are important counter-trends to this – like encryption and cryptocurrency – that take power from centralized systems and put it back into people’s hands.”

Zuckerberg said that, while such technologies can be difficult to control, there are definitely benefits they could deliver to a platform like Facebook, which he said he intended to explore this year.

Mastercard

Mastercard CFO Martina Hund-Mejean said the company would not work with any unregulated currency that does not have the support of government, so bitcoin is out – but that doesn’t rule out other applications of blockchain.

She said that Ripple’s use of blockchain to create a messaging format similar to SWIFT – the Society for Worldwide Interbank Financial Telecommunication, which connects financial institutions around the globe – could have some potential.

The issue, according to Hund-Mejean, is that Ripple users must use Ripple’s currency to settle, which she said many people won’t want to do because the currency is unregulated. Instead, Mastercard would use its own blockchain, she said.

“We definitely see a place for the blockchain,” said Hund-Mejean, “but in terms of instant payments on it, it’s light years away. Parts of the blockchain can be utilized in the payments process, but that doesn’t mean you’ll be doing settlement anytime soon.”

Rakuten

In 2016, Rakuten acquired a bitcoin wallet startup, Bitnet. Now, the Japanese eCommerce platform is leveraging that acquisition to create a new cryptocurrency called Rakuten Coin, which meshes with its current loyalty program, Rakuten Super Points.

Rakuten CEO Hiroshi Mikitani describes Rakuten Coin as a “borderless” currency, which the company seems to believe it can leverage to drive more international transactions by eliminating some of the exchange rate fees.

Starbucks

Executive chairman Howard Shultz said last week that Starbucks may use blockchain technology within a new payments app based on a “proprietary digital currency.” Shultz commented that the integrated app would most likely sit on blockchain rails rather than a more centralized system of accounting.

That gels with statements by the former CEO during a recent earnings call, suggesting that the chain planned to utilize the tech in some fashion on the payments front.

Shultz said he believes blockchain could help Starbucks continue to expand its digital relationships with customers, and that the technology will one day prove foundational to a digital currency with real consumer applications.